The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Wednesday, September 8, 2010

First home buyers back and lending standards relax

For some time now I have argued here that I expected to see a relaxation in credit standards as lenders sought to drive otherwise exceedingly weak credit growth. This is what the industry bible, Banking Day, reported today:

First-home buyers re-emerge
08 September 2010 7:17am

Stabilisation in house prices, combined with greater competition in mortgage lending, has given first-home buyers the incentive to get back into the property market. Mortgage aggregator AFG reported yesterday that sales to first-home buyers made up 11.7 per cent of the loans written by its brokers in August, an increase from 11.1 per cent in July and 9.5 per cent in June.

Competition between lenders has been evident in the increasing number of them offering mortgages with loan to valuation ratios above 90 and 95 per cent. High LVRs are popular with first-home buyers, who often struggle with deposit requirements.

Yesterday AMP Bank dropped its basic variable rate for new customers by 13 basis points to 6.54 per cent. AMP is also offering a three-year basic fixed rate loan at 6.99 per cent...

Genworth relaxes underwriting criteria
08 September 2010 7:17am

Mortgage insurer Genworth Financial has started to relax its underwriting criteria, reflecting its view that the home loan market has stabilised after a volatile couple of years in 2008 and 2009.

Genworth’s acting chief executive Paul Caputo said yesterday the group had relaxed its view on earnings from overtime and second jobs in loan serviceability calculations...

Caputo said: “We support loans up to 95 per cent LVR. One of the lessons of the global financial crisis is that where a borrower has skin in the game the behaviour is very different.

“I don’t think we will get back to underwriting 100 per cent LVR loans.

“Another factor is the National Credit Act. It would be hard to see how a 100 per cent LVR loan would fit into the responsible lending criteria.”